424 F.

2d 14

RADIO CORPORATION OF AMERICA, Plaintiff,

v.
RADIO STATION KYFM, INC., Cleeta John Rogers,
Defendants and Third-Party Plaintiffs-Appellees,
BANKERS FINANCIAL LIFE COMPANY (formerly
American Preferred Life Insurance Company), Third-Party
Defendant-Appellant,
Kennesaw Life and Accident Insurance Company, Harry
McFarland and Delbert Livingston, Third-Party Defendants.
No. 172-69.

United States Court of Appeals, Tenth Circuit.

March 24, 1970.

COPYRIGHT MATERIAL OMITTED Loyd Benefield, Oklahoma City,

Okl. (Howard B. Austin, Oklahoma City, Okl., on the brief), for
appellees.
Walter D. Hanson, Oklahoma City, Okl. (James M. Robinson, Oklahoma
City, Okl., on the brief), for appellant.
Before LEWIS and HILL, Circuit Judges, and LANGLEY, District Judge.
HILL, Circuit Judge.

This diversity suit originated when Radio Corporation of America sued radio
station KYFM on a promissory note and chattel mortgage given to RCA for the
purchase price of radio station equipment. Cleeta John Rogers was made a
defendant to the suit by reason of an agreement made in writing by him
guaranteeing the payment of the purchase price of the equipment. KYFM and
Rogers then filed a third-party complaint against Bankers Financial Life
Company and Kennesaw Life and Accident Insurance Company alleging that
the latter parties are ultimately liable for any recovery against them by RCA. In
pleading to the third-party complaint appellant filed only a general denial.
Judgment was entered in accordance with the prayer of the original complaint

in favor of RCA against KYFM on the note and against Rogers on his guaranty
of KYFM's obligation to RCA. After the trial of the third-party complaint to a
jury, a verdict was rendered in favor of KYFM and Rogers and against Bankers.
The theory of the third-party complaint was, (1) Bankers had requested Rogers
to execute the written guaranty to RCA and promised to hold Rogers harmless
on that guaranty, and (2) American Preferred Life agreed with KYFM to pay
for the RCA equipment and thereby induced KYFM to make the purchase.
2

The undisputed facts developed at the trial of the third-party action are that in
1962 Rogers obtained an interest in radio station KYFM. At that time he was
vice-president and legal counsel for American Preferred Life Insurance
Company whose successor was Bankers Financial Life Company.1 At the time
Rogers obtained his interest in KYFM, the radio station was in financial
trouble. And when the financial problems continued into the fall of 1962,
Rogers undertook to raise money for KYFM by selling 65% of KYFM's stock
to American Preferred Life. Rogers negotiated the transaction for both
companies, and according to Rogers' testimony the deal was consummated.
However, the stock purchase never appeared on American Preferred Life's
books. Instead, American Preferred Life's financial statements for 1962
reflected a $16,500 account receivable, which according to Rogers was an
attempt to disguise the stock purchase so that American Preferred Life's yearend records would look better.

While the stock purchase negotiations were taking place, KYFM was
attempting to buy radio station equipment from RCA on credit. RCA wanted a
guarantee to back KYFM's note, so Rogers wrote RCA on December 20, 1962,
and enclosed his personal guarantee of KYFM's note. Rogers testified that he
gave RCA his personal guarantee because American Preferred Life requested
him to do so and also agreed to provide for his release from his guarantee;
American Preferred Life did not want to become the guarantor at that time
because they did not want to reflect their interest in KYFM in their year-end
financial statements. On September 21, 1966, Rogers renewed and extended the
guaranty pursuant to a provision for such extension in the original guaranty.
The jury in this controversy found in favor of KYFM and Rogers and against
Bankers Financial Life Company in the amount of $20,000, which was the
amount of RCA's judgment against KYFM and Rogers.

At the outset of our discussion of the issues raised here, we must point out that
we are guided by some very definite and well settled legal principles. First in
mind is Rule 8(c), F.R. Civ.P., 28 U.S.C. This rule requires a party pleading to
a preceding pleading to set forth affirmatively all matters which the pleading
party intends to use as an avoidance or affirmative defense. If such defenses are

not affirmatively pleaded, asserted with a motion under Rule 12(b) or tried by
the express or implied consent of the parties, such defenses are deemed to have
been waived and may not thereafter be considered as triable issues in the case.2
The statute of frauds, illegality of an act, lack of authority to enter into a
contract and "any other matter constituting an avoidance" are clearly included
in the affirmative defenses covered by Rule 8(c). An affirmative defense may
not be first effectively raised during the trial of a case simply by objections to
evidence, offers to introduce evidence or by motions unless the parties
impliedly or expressly agreed to the injection of the new issue into the case and
the trial of the same.3 It is axiomatic that the failure of a party to effectively
raise an affirmative defense precludes any requirement that the trial judge
present such issue to the jury by an instruction.4
5

Appellant Bankers first urge here that appellees failed to make out a case for
the jury and that the trial judge erred by not granting appellant's motion for
judgment notwithstanding the verdict. In doing so, appellant raises a spate of
issues, the first of which is the contention that American Preferred Life's
purchase of KYFM stock was an illegal investment for an insurance company
under Oklahoma statute. "Illegality" however is an affirmative defense. Since it
was not affirmatively set forth in appellant's pleadings or tried by the express or
implied consent of the parties, it was waived and therefore not an issue at the
trial of the third-party complaint. We are thereby precluded from considering
the point. It should be noted that it is difficult to understand how this point
relates to the agreement of American Preferred Life to provide for the release of
Rogers as guarantor and hold him harmless on his guarantee of KYFM's note.
Likewise we are precluded from considering whether the agreement to hold
Rogers harmless on his guarantee is invalid under the Oklahoma Statute of
Frauds because the statute of frauds is also an affirmative defense which was
not properly pleaded by appellant's answer nor was the issue presented during
the trial and tried by the express or implied consent of the third party
complainants.

Another point not properly before this court sitting in review is appellant's point
that the contract of guarantee claimed by Rogers is illegal. Under this heading
of illegality, appellant asserts that the president of American Preferred Life,
like any other corporation president has no inherent power to contract for the
corporation. Appellant urges that the president lacked authority to enter into a
contract. But, "The defense of want of authority is an affirmative defense and
must be specifically pleaded."5

This brings us to appellant's next three points: That American Preferred Life
made all the investments which it agreed to make; that there was never any

obligation flowing to KYFM from American Preferred Life; and no one on

behalf of American Preferred Life authorized Rogers to execute an extension of
the guaranty in 1966. Appellant provides us with no authority by which we may
review the record and hold in his favor on these points. Furthermore, it is not
clear from the argument under these points whether they are posed as an
avoidance of whether appellant is disputing the sufficiency of the evidence
establishing the agreements made by American Preferred Life. If appellant is
urging the former, then once again appellant has failed to assert an affirmative
defense in a timely manner under Rule 8(c). If it is the latter, then the argument
is without merit since we have reviewed the record and have determined that
there is sufficient evidence to support the jury's verdict. If appellant's point is
that these are mixed questions of fact and law that should have been submitted
to the jury under proper instructions, then his failure to make specific
objections after the trial judge instructed the jury precludes us from considering
the points.6
8

Finally we deal with appellant's contention that the trial judge erroneously
instructed the jury. At trial, appellant submitted requested instructions to the
trial judge, several of which were refused and excepted to. After the jury was
instructed and before it retired to deliberate the trial judge inquired whether
either counsel had any objections to the instructions. Counsel for appellant
objected to several of the instructions as being of no aid to the jury and objected
to the failure of the trial judge to give appellant's requested instructions on the
Oklahoma statute governing investments by Oklahoma insurance companies.7
Appellant urges here, as before in the trial court, that Instruction No. 3 is a
good abstract statement of the law but of no aid to the jury in this case. We
cannot agree that this instruction was irrelevant to the controversy submitted to
the jury. Moreover, the trial judge did not err in not giving appellant's requested
instruction on the Oklahoma statutes governing the investments of insurance
companies because as we have made clear above, the legality of the insurance
company's investments was not an issue properly raised and before the trial
court. It is the duty of the trial court to instruct the jury on issues raised by the
pleadings and supported by the evidence and nothing more.8 Likewise, we find
no merit in appellant's argument which makes the same objection to Instruction
No. 4A. Here again appellant objects to the refusal of the trial judge to include
the statutes on insurance company investments in the instructions; and here
again we say that the trial judge was correct in not instructing on an issue not
present in the pleadings or proof. The objection to Instruction No. 4 is also
without merit because Instruction No. 5 substantially gives the instruction of
proof of agency that appellant would substitute for Instruction No. 4.

In addition to the filed appendix and briefs we called for and have carefully

reviewed the trial transcript. With the entire record before us and in the light of
the well established rules of practice and procedure we are compelled to the
conclusion that the trial judge adequately submitted the triable issues to the jury
and that there is sufficient evidence in the record to support the verdict returned
by the jury.
10

Affirmed.

Notes:
1

Rogers was also a stockholder, director, and legal counsel for American
Preferred Corporation which owned all of the stock of American Preferred Life
Insurance Company

Albee Homes, Inc. v. Lutman, 406 F.2d 11 (3d Cir. 1969); Badway v. United
States, 367 F.2d 22 (1st Cir. 1966)See Systems Incorporated v. Bridge
Electronics Company, 335 F.2d 465 (3d Cir. 1964); Taylor v. Reo Motors, Inc.,
275 F.2d 699 (10th Cir. 1960); Kaye v. Smitherman, 225 F.2d 583 (10th Cir.
1955). See also 2A Moore's Federal Practice 8.27 [3] (2d ed. 1968).

Rule 12(b), F.R.Civ.P., 28 U.S.CSee Branding Iron Club v. Riggs, 207 F.2d
720, 724 (10th Cir. 1953). See also Simms v. Andrews, 118 F.2d 803, 807
(10th Cir. 1941).
It should be noted that we are not holding that if a party fails to raise an
affirmative defense in his original responsive pleadings he is forever barred
from raising it. Normally the proper remedy is to move for leave to amend
under Rule 15 of the Federal Rules of Civil Procedure. Albee Homes, Inc. v.
Lutman, 406 F.2d 11 (3d Cir. 1969). Rule 15(b) allows amendments to conform
to the evidence when the issues not raised by the pleadings are tried by express
or implied consent of the parties. "The rule is applicable only where it clearly
appears from the record that an issue not raised in the pleadings and not
preserved in the pretrial order has in fact been tried and that this procedure has
been authorized by express or implied consent of the parties." Systems
Incorporated v. Bridge Electronics Company, 335 F.2d 465 (3d Cir. 1964).

Bethel v. Thornbrough, 311 F.2d 201 (10th Cir. 1962); Taylor v. Reo Motors,
Inc., 275 F.2d 699, 703 (10th Cir. 1960)

Branding Iron Club v. Riggs, 207 F.2d 720, 725 (10th Cir. 1953)

Murphy v. Dyer, 409 F.2d 747 (10th Cir. 1969); Union Pacific Railroad
Company v. Lumbert, 401 F.2d 699 (10th Cir. 1968); Smith v. Greyhound
Lines, Inc., 382 F.2d 190 (10th Cir. 1967); Dunn v. St. Louis-San Francisco
Railway Company, 370 F.2d 681 (10th Cir. 1966)

The instructions given were:

"INSTRUCTION NO. 3 A CORPORATION CAN ACT ONLY THROUGH
AGENTS
"The corporations in this case and any corporation, as such, can act only
through their officers and employees, and others designated by them as their
agents.
"Any act or omission of an officer, employee or other agent of a corporation, in
the performance of his duties, or within the scope of his authority, is held in
law to be the act of the corporation.
"INSTRUCTION NO. 4 PRINCIPAL AND AGENT DEFINED
"You are instructed that the relationship of principal and agent is created as the
result of either a contract between the parties or by the conduct of the parties
manifesting that one of them is willing for the other to act for him subject to his
control and direction, and that the other or others consent so to act. The
relationship may arise by reason of an express contract between the parties or
the relationship may be implied without an express contract from the words and
conduct of the parties under the circumstances of the particular case.
"INSTRUCTION NO. 4A CONTRACT DEFINED
"You are instructed that a contract, whether written or oral, is an agreement
between two or more parties, competent to contract, upon a lawful subject
matter, with a legal consideration, a mutuality of agreement and mutuality of
obligation.
"No precise or set form of words is necessary to constitute a contract as the
agreement of parties may be inferred from their acts and conduct as well as
from their words.
"In order to constitute a contract between two parties, however, their minds
must come together and agree upon all its essential terms and conditions. In
other words, there must be a meeting of the minds of the contracting parties

upon the essential terms and conditions of the subject about which they are
contracting."
8

Metropolitan Paving Company v. Puckett, 389 F.2d 1 (10th Cir. 1968); Century
Refining Company v. Hall, 316 F.2d 15 (10th Cir. 1963); Bethel v.
Thornbrough, 311 F.2d 201 (10th Cir. 1962); Taylor v. Reo Motors, Inc., 275
F.2d 699 (10th Cir. 1960)